In 1951, the Self-Employment Contributions Act (SECA) extended coverage under the social security system to the self-employed.
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In 1951, the Self-Employment Contributions Act (SECA) extended coverage under the social security system to the self-employed.
SECA uses an individual’s self-employment income as the basis for levying taxes and for determining the amount of income to credit toward OASDI insurance benefits or HI coverage. Self-employment income generally consists of the net earnings derived by individuals from a business or profession carried on as a sole proprietorship or as a partnership. Self-employed persons determine their net earnings by finding the sum of the following:
- Gross income
- Distributive share
Using the information provided here and in your text, complete the following:
- Gross income is defined as income derived from:______ by the individual, less allowable deductions.
- _________ , the distributive share is the ordinary net income or loss from any business or profession carried on by: ________.
- The self-employed OASDI tax rate for 2020 is:______ in decimal format or:_________% in percentage format.
- The self-employed HI tax rate for 2020 is:_______ in decimal format or:______% in percentage format.
- Self-employment income subject to a supplemental HI tax of_______% for earned income in excess of $____ for individuals whose filing status is Single.
- True or False: If the individual is also an employee of another company, the wages received will not reduce the amount of self-employment income that is taxed for OASDI.
- Earnings of less than: $____ from self-employment are ignored.
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